Cost of goods rises as consumers reject Sh1 coins

Market News

Cost of goods rises as consumers reject Sh1 coins

The new Sh1, Sh5, Sh10 and Sh20 coins. PHOTOS | NMG 

Majority of shoppers have stopped using Sh1 coins, a spot check by Business Daily has shown.

The preference for higher-value coins and crisp notes is fuelling a new wave of inflation as retailers prefer to increase prices in multiples of fives and tens to avoid the low-value currency.

Last year, the Central Bank of Kenya (CBK) issued new generation Sh1, Sh5, Sh10 and Sh20 coins that, unlike the old currencies, are engraved with images of wildlife in compliance with the Constitution.

Despite the new look, Kenyans have shied away from using the coins in regular retail transactions even though odd-price items valued at Sh2, Sh3, Sh7 or Sh9 still exist in a number places like cyber cafes and fresh produce markets.

Also being practised is the use of psychological pricing as valuing goods at Sh99,999 to entice buyers who are reluctant to spend Sh100,000.


In some shops in Mombasa, the price of an egg has gone up from Sh12 to Sh15, salt now retails at Sh20 instead of Sh17 while a matchbox has shot to Sh5 up from Sh3.

This wave of inflation, which is not supported by market forces, still ends up weakening the purchasing power of households.

On Sunday evening after a ride on a tuk-tuk in Mombasa, Mr Kelvin Nyawa tried to top up the Sh40 he had paid in two Sh20 coins using 10 pieces of Sh1 coin.

“The driver shouted and asked me to pay him with ‘useful money’. I had to pay via M-Pesa as though the CBK had invalidated the Sh1 coin,” he lamented.

Mombasa residents are finding it tough to use Sh1 coins for retail transactions as few people accept them as legal tender these days.

With no takers, the coins are piling in jars, boxes and children’s piggy banks

Paul Gitonga, a taxi driver, says he empties every Sh1 coins that come his way into an old container.

“I occasionally take them to the supermarkets to exchange for notes,” he said.

“Nobody takes these coins these days. Not even the local shops. Some traders do not even recognise them and they think these are foreign currencies.”

The economy finds itself in a vicious cycle where the buyer is afraid the cashier would reject coins while the latter are afraid customers would not accept them in change.

“Last year, buyers stopped accepting the Sh1 coins as change. It got to a point where we would give sweets, chewing gum or matchboxes as change. We no longer accept the coins,” said a shopkeeper only identified as Salim.

The silver-coloured Sh1 coins weigh 5.5 grammes while the Sh5 coin weighs 3.75 grammes with a diameter of 19.5 millimetres.

When Kenyans decided to keep their coins away, perhaps discouraged by retailers, the economy felt the pinch and the poor bore the brunt as the shortage persisted for months.

The CBK then launched a campaign dubbed “Chomoa coins” to persuade the coins out of their hideouts in homes, cars and work places, back to circulation.

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